This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

VILLAGES -- Powers and Duties (conveyance for nominal consideration to private not-for-profit corporation)

CONSTITUTIONAL LAW -- Gifts and Loans (transfer of village real property for nominal consideration to not-for-profit corporation)

REAL PROPERTY -- Conveyances Generally (consideration required)

FIRE DEPARTMENT -- Villages (existence of fire companies in villages as resulting in incorporation of fire department)

NOT-FOR-PROFIT CORPORATION LAW, §1402; VILLAGE LAW, §10-1008: By operation of law, the mere existence of fire companies in the village results in a corporation known as the village fire department.

VILLAGE LAW, §1-102(1); STATE CONSTITUTION, ARTICLE VIII, §1: A village may not permit an exempt firefighters' benevolent association to use village real property, or convey title to village real property, without consideration or for nominal consideration.

You ask whether it is necessary for the members of a village volunteer fire department to form a not-for-profit corporation constituting the incorporated village fire department. You also ask whether the village may lease or convey title to village land for nominal consideration to an exempt firefighters' benevolent association established by special act of the State Legislature for the purpose of receiving foreign fire insurance tax moneys.

Not-For-Profit Corporation Law, §1402 provides for the establishment, as not-for-profit corporations, of fire corporations. Village Law, §10-1008, however, provides that the members of all the fire companies of a village, organized and maintained pursuant to law, "constitute a corporation by the name of the fire department of [the village]". Accordingly, by operation of law, the mere existence of fire companies in the village results in a corporation known as the village fire department and, therefore, no further action by members of the fire companies is necessary to establish a separately incorporated fire department (11 Opns St Comp, 1955, p 668; 9 Opns St Comp, 1953, p 276; 8 Opns St Comp, 1952, p 161). We note, however, that each fire company of the department may separately incorporate in accordance with Not-For-Profit Corporation Law, §1402. We are enclosing a copy of 1990 Opns St Comp No. 90-19, p 42 which discusses the differences between a village fire department and a fire company.

Insurance Law, §§9104-5 govern the distribution and use of foreign fire insurance tax moneys, except as otherwise provided by special act of the State Legislature. A volunteer firefighters' benevolent association may be established by special act, and may be authorized to receive foreign fire insurance tax moneys and expend such moneys for the purposes specified in the special act (see, e.g., L 1994, ch 207; L 1993, ch 326; L 1990, ch 674). These types of special acts generally create the benevolent association as a not-for-profit corporation (id.).

Article VIII, §1 of the State Constitution prohibits the gift or loan of moneys or property of a village to or in aid of any private corporation, association, individual or undertaking. Since an exempt volunteer firefighters' benevolent association is a private not-for-profit corporation, a village may not give or loan its money or property to such an organization. Accordingly, the village may not permit an exempt volunteer firefighters' benevolent association to use village real property without consideration or for nominal consideration, or convey its real property to such an entity for no or nominal consideration. Rather, conveyance must be in exchange for fair and adequate consideration. Further, although competitive bidding is not required by statute, prior to negotiating with the benevolent association, the village board should take steps to ensure that the conveyance is upon the best or most beneficial terms to the village (see, e.g., 1994 Opns St Comp No. 94-12, p __).

October 31, 1994
Sanford L. Church, Esq., Village Attorney
Village of Albion